On several recent occasions, Agriculture Secretary Tom Vilsack has referenced the importance of resolving the longstanding Brazil WTO case through new farm policy while expressing 1) concern about Congressional failure to act on long-term policy and 2) questions about continuing to transfer funds to Brazil as part of an agreement to prevent retaliation.
In December remarks to a conference sponsored by the U.S. Chamber of Commerce, Vilsack said, “As you may know, Brazil took the United States to the WTO on its support for cotton … and we have reached an agreement with Brazil in the interim to avoid retaliation while we encourage Congress to fix the problem.
“It is important that Congress resolve this issue with Brazil. It's important that we reform our cotton support and subsidy system, and that we reform our export credit programs so that they are in better compliance with the WTO.
“We have put in place a framework that will allow us to prevent the retaliatory efforts that Brazil would be entitled to pursue. Nearly $800 million of retaliation has been stopped for the time being.
“I will tell you that that $800 million isn't just in agriculture; the reality is that we don't do that much activity with Brazil, so they would be able to look at other aspects of our economy, and they have a particular interest in our intellectual property. And so it is very important for Congress to attend to this issue.”
In remarks last week, he said, “And we were also acutely aware that neither the extension, nor the failure to pass a farm bill resolves the issue with reference to Brazil and cotton, which could potentially threaten significant retaliation against not just American agriculture but other products.
“And I'm hopeful we'll have several announcements here in the very near future as it relates to some markets that have been closed for a while opening up. But we must solve some of the vexing problems associated with Brazil and cotton if we are to ensure there will not be appropriate retaliation against the United States.”
Following his address to the U.S. Conference of Mayors, Vilsack told the press he wants to see Congress move soon on developing a new farm bill, for a number of reasons, including to settle “once and for all” the multi-year dispute with Brazil over the way the U.S. supports its cotton producers.
A temporary agreement was reached that includes a requirement that the United States transfer $147 million annually to the Brazilian Cotton Institute in return for Brazil’s agreement not to initiate retaliation.
Secretary Vilsack told reporters that those payments cannot continue “ad infinitum.” He said, “It makes no sense for American taxpayers to hand over their money to Brazil, especially given the tight U.S. budget situation and the deteriorating economic situation in rural America.”
He said his department and USTR are in constant contact with Brazil but he suggested “the issue can only be resolved through legislation — preferably a new farm bill.”